Production may total 25 million tonnes in the year starting October 1, compared with 25.5 million tonnes forecast in June, Kingsman said. The estimate matches those by the Indian Sugar Mills Association and the National Federation of Cooperative Sugar Factories Ltd. Output this year is set to total 26 million tonnes, it said. A smaller crop and a rally in domestic prices may reduce the availability of Indian sugar for exports, potentially narrowing a global surplus and supporting prices. Overseas sales may slump 43 per cent to 2 million tonnes next season from 3.5 million tonnes this year, Kingsman said.
Sugar prices on the National Commodity & Derivatives Exchange Ltd in Mumbai surged 26 per cent since the end of May on speculation below-average monsoon rain in more than 50 per cent of India will hurt crops from cane to rice and cotton. Futures climbed to Rs 3,672 ($66) on August 4, the highest level since December 2010. The harvest in Maharashtra state, the biggest producer, may drop to 7.5 million tonnes to 7.6 million tonnes next year from 9 million tonnes this year, Kingsman said.
With the rainfall picking up in the last few weeks, prices for agri-commodities like sugar, turmeric, potato, pepper and cotton have gone down.